eClerx (ECLX) reported an above-expected operating performance in the Mar'19 quarter on the back of in-line revenues and an operating margin beat. A combination of offshore revenue growth and onsite revenue decline aided margins, though this trend is unlikely to continue, in our view. Management was noncommittal on FY20 revenue growth and margins, citing uncertainty led by short-tenured contracts and a changing business mix. We maintain...

The BJP led NDA is set for a resounding win with an even bigger majority (344 seats) and a higher vote share (up 9% versus 2014). In its election manifesto, BJP aims to increase the size of the economy to US$ 5tn by 2025 led by Rs 100tn of infra investment. Rural India will get 25% of the above allocation. Roads, housing, and water will get priority. Further, farmer income and rural demand will get a boost with wider coverage under PM-KISAN. Continuity of...

The BJP led NDA won a decisive majority (341 seats) and a higher vote share (up 9% versus 2014) in the general elections 2019. The government will continue to focus on agriculture and infrastructure sector as proposed in its election manifesto to increase the size of the economy to US$ 5tn by 2025. Continuity of economic policies amidst gloomy global outlook will support foreign inflows and thus a stable INR. New home sales in the US fell by (-) 6.9% on a MoM basis in Apr'19 from 8.1% in Mar'19 driven by rise in median home prices (+8.8% vs -8.8% in...

Stellar quarter; well placed to fend off headwinds Q4FY19 was a stellar quarter for Allcargo Logistics (AGLL) marked by a surge in adj. PAT to Rs 802mn vs. Rs 199mn in Q4FY18, led by sharp improvement in P&E; segment profitability. However, performance of the MTO and CFS segments was relatively underwhelming. While we remain cognizant of nearterm industry headwinds (escalating global trade wars, moderating container growth at key ports), we believe AGLL is well placed to withstand the...

Cipla reported a 13% beat on sales and EBITDA adjusting for gSensipar contribution in the US (US$ 40mn per management) during Q4. The beat was led by recovery in Europe & South Africa (private market), a higher US DTM mix and India growth. Cipla sees low litigation risk in the gSensipar at-risk launch and is guiding for an improved FY20, with double-digit growth in the US (incl. one inhaler launch). FY19 reported EPS is Rs 19 (Rs 2 from non-core...

RBI reported that currency in circulation increased by Rs 60.3bn (on a weekly basis) and stood at Rs 22tn as on 17 May 2019. Overall reserve money grew by only 13.5% on a YoY basis compared to 25% a year ago. On FYTD basis, reserve money rose by 1.7% vs 2.6% last year. US Fed minutes reflected a patient approach with regard to future course of fund rate. This was on the back of subdued global growth and muted inflation print. However, the minutes highlighted that recently some signs of improvement are visible in domestic growth indicators....

The BJP led NDA is set for a resounding win with an even bigger majority (344 seats) and a higher vote share (up 9% versus 2014). In its election manifesto, BJP aims to increase the size of the economy to US$ 5tn by 2025 led by Rs 100tn of infra investment. Rural India will get 25% of the above allocation. Roads, housing, and water will get priority. Further, farmer income and rural demand will get a boost with wider coverage under PM-KISAN. Continuity of economic policies...

All the three OMCs IOCL, BPCL and HPCL reported Q4FY19 earnings well above estimates due to a surge in marketing segment earnings (80-130% YoY) to recoup the massive inventory losses incurred in Q3. However, these margins have normalised from Q1FY20. GRMs across OMCs were muted, with BPCL trailing the pack due to steep underperformance at its Kochi refinery. We maintain BUY on IOCL but retain SELL on BPCL/HPCL due to...

As per latest forecasts by OECD, GDP growth in India is expected to accelerate to 7.5% in FY21 from 7.2% in FY19. This will be on the back of pickup in rural demand as a result of government's income support scheme for small and marginal farmers as well as better investment growth. Lower oil prices, INR appreciation and benign inflation will also help. Flash estimates showed that consumer confidence in both the Euro area and EU inched up by 0.8 and 1.1 points respectively. Both the indicators have been above long period averages. The uptick in consumer confidence...

Exit poll results predict an easy win for the ruling BJP party. Poll of polls predicts NDA will win 315 seats out of 542 seats and UPA alliance is expected to win 111. As a result, domestic markets opened higher today with 10Y yield lower by 6bps, INR up by 1.1% and Sensex gaining over 2%. Notably, the error rate in final results and exit polls can be 15-20%. A clear majority, counting on 23 May) will ensure India's outperformance when global markets are facing significant headwinds in the form of subdued growth and US-China trade war....

Media reports suggested that India is proposing to create a new entity namely National Infrastructure Credit Enhancement Ltd or NICE. For this purpose, NABARD and NHB will be roped in as investors and IIFCL will hold 22.5% of the stake. This might be beneficial in meeting the infrastructural gap of the economy. Taiwan's export orders continued to fall in Apr'19 by (-) 3.7% on a YoY basis vs (-) 9% in Mar'19. Softening demand for optical equipment (-8.9%) and electrical machinery products (-4.6%) from mainland China (-9.9%) is a...

Lopsided growth yet again as enterprise business disappoints Tech Mahindra's (TECHM) Mar'19 quarter was below estimates due to a disappointing performance from the enterprise business where a few large projects drew to a close and new contract signing was delayed. Enterprise revenue dipped 2.2% QoQ while communication revenue increased 4.4%. Management retained its FY20 growth outlook and is targeting flat to marginally better operating margins. We trim FY20/FY21 earnings estimates...

OMCs' Q4 scorecard GRMs tepid, marketing earnings surge All the three OMCs IOCL, BPCL and HPCL reported Q4FY19 earnings well above estimates due to a surge in marketing segment earnings (80-130% YoY) to recoup the massive inventory losses incurred in Q3. However, these margins have normalised from Q1FY20. GRMs across OMCs were muted, with BPCL trailing the pack due to steep underperformance at its Kochi refinery. We maintain BUY on IOCL but retain SELL on BPCL/HPCL due to...

The USFDA has classified three of Aurobindo Pharma's (ARBP) facilities API units 1 & 9 and intermediate unit 11 under OAI (official action indicated). These units were inspected in Feb'19 and received a total of 14 observations. Common 483s were around a lack of root cause analysis and production equipment validation. While existing sales won't be hit, we believe resolution at these sites will be key to future growth. In the worst case (WL), there could be a further 7% downside from CMP but >25% upside if EIR is received. BUY....

Exit polls predict a return of NDA led by BJP. Poll of Polls showed NDA getting a clear majority of 315 seats out of 542 seats. The lowest poll shows NDA returning with 267 seats and highest shows 354 seats. Notably, exit polls can have an error of 15-20% which has been the case in the past. India's forex reserves rose to the highest in over a year at US$ 420.1bn in the week ending 10 May 2019. On a weekly basis, forex reserves rose by US$ 1.4bn compared with an increase of US$ 0.2bn last week. In CY19, forex reserves have increased by US$ 26.7bn vs an increase of US$ 8.3bn...

Exit poll results predict an easy win for the ruling BJP party. Poll of polls predicts NDA will win 315 seats out of 542 seats and UPA alliance is expected to win 111. As a result, domestic markets opened higher today with 10Y yield lower by 6bps, INR up by 1.1% and Sensex gaining over 2%. Notably, the error rate in final results and exit polls can be 15-20%. A clear majority, counting on 23 May) will ensure India's outperformance when global markets are facing...

Scenario analysis for OAI units warning letter partly priced in The USFDA has classified three of Aurobindo Pharma's (ARBP) facilities API units 1 & 9 and intermediate unit 11 under OAI (official action indicated). These units were inspected in Feb'19 and received a total of 14 observations. Common 483s were around a lack of root cause analysis and production equipment validation. While existing sales won't be hit, we believe resolution at these sites will be key to future growth. In the worst case (WL), there could...

Centre has already procured 29mn tn of wheat in the marketing year 201920 against the target of 35mn tn. Last year it had procured 35.8mn tn of wheat vs an initial target of 32mn tn. Within the 29mn tn procured, Punjab and Haryana have purchased over 12.1 and 9 mn tn respectively. FCI is likely to offload over 10 mn tn of wheat in FY20 in order to manage the space crunch issue due to overstocking of its godown. New home prices in China rose by 10.7% in Apr'19 vs 10.6% in Mar'19. Out of the 70 cities, 67 reported an increase in prices. Loosened credit conditions, lower mortgage rates and easing restrictions by local...